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International fuel tax assessment: an application to Chile

Published online by Cambridge University Press:  31 January 2012

Ian Parry  and
Jon Strand
Ian Parry
Affiliation:
Fiscal Affairs Department, International Monetary Fund, 700 19th Street NW, Washington, DC 20431, USA. Email: iparry@imf.org
Jon Strand
Affiliation:
World Bank, Washington, DC, USA. Email: jstrand1@worldbank.org
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Abstract

Gasoline and diesel fuel are heavily taxed in many developed and some emerging and developing countries. Outside the United States and Europe, however, there has been little attempt to quantify the external costs of vehicle use, so policy makers lack guidance on whether prevailing tax rates are economically efficient. This paper develops a general approach for estimating motor vehicle externalities, and hence corrective taxes on gasoline and diesel, based on pooling local data with extrapolations from US evidence. The analysis is illustrated for the case of Chile, although it could be applied to other countries.

Type
Research Article
Information
Environment and Development Economics , Volume 17 , Issue 2 , April 2012 , pp. 127 - 144
Copyright
Copyright © Cambridge University Press 2012

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